IT salaries begin to thaw, with median pay for staffers at $90,000 and managers at $120,000.

Chris Murphy, Editor, InformationWeek

April 10, 2013

16 Min Read

IT is consistently cited as one of the most-promising U.S. careers, even with the rise of offshore outsourcing. As with most professions, however, compensation is rising only modestly. The IT field still pays well, with staffers earning $90,000 in median total compensation and managers earning $120,000, the 2013 InformationWeek U.S. IT Salary Survey finds. But compensation for staffers is flat compared with last year and up only 3% for managers.

Compensation varies substantially by skill and industry. Staffers focused on enterprise application integration earn a median $110,000, those in general IT earn $73,000 and those on the help desk earn $55,000. A few staff specialties such as cloud computing ($130,000), Web security ($118,000) and mobile ($111,000) pay even higher, though our survey sample sizes are small for those areas. Staffers with the IT architect title make a median $130,000.

IT managers earn six-figure median compensation in 22 of 23 job categories -- help desk managers are the exception, earning $83,000. Among IT staffers, 13 of the 23 functions pay more than $90,000, eight of them more than $100,000.

This marks the 16th year of our Salary Survey, so we have data to track long-term trends. Compared with 10 years ago, few IT employers have dropped health insurance and 401(k) match benefits -- the percentage of respondents receiving those benefits declined only a few points, to 81% and 70%, respectively. The one plunge is in "further education/training," down from 45% for staffers and 46% for managers in 2004 to 29% for staffers and 28% for managers today. And people are our most important asset?

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Here are some other data points that should serve as a warning for IT leaders looking to find and keep talented people.

>> Paychecks are barely thawing, but don't take your talent for granted.

Our Salary Survey shows IT pros getting small raises and only average bonuses despite signs that hiring is picking up. IT staffers report a median rise in total compensation of 1.1% and managers a rise of 2%. As recently as 2010, both staffers and managers reported a change in median salary of 0%.

Bonuses are at best average across industries. The typical manager gets 8% of pay ($10,000) from bonuses and other cash compensation beyond salaries, which is exactly the average bonus percentage over the past 14 years. Manager bonuses are significantly higher in some industries -- as a percentage of total comp, bonuses in the financial, biotech, distribution, food and banking sectors all average in the low teens. Government, education and nonprofit employers pay their tech managers bonuses that average 2% or less of total comp. As for IT staffers, bonuses represented 3% of their total pay this year, a notch below the 5% historical average.

IT hiring appears to be on the rise, even though we aren't seeing enough demand to drive pay spikes. IT accounted for 13% of the 88,000 net new jobs in the U.S. economy in March, according to a Foote Partners analysis of Bureau of Labor Statistics data. Monthly IT job growth in 2013 is 53% ahead of the pace last year, Foote finds.

A warning for managers: Even though salaries are growing slowly, don't kid yourself into thinking that your "great place to work" office environment will be enough to keep your most talented people if you're not staying competitive on pay. In our survey, staffers cite base pay as a bigger priority than any other, and it's a close third for managers. More than two-thirds of IT pros cite higher pay as the reason for seeking a new job, and nothing else is cited by even half.

>> Don't learn wrong lesson from Yahoo's no-telecommuting flap.

What matters most to IT pros about their jobs? We asked survey respondents to pick seven priorities from a list of 24. Staffers cite "flexible work schedule" third most often (43%), tied with benefits and trailing only pay (48%) and job stability (45%). Just 26% of staffer respondents cite working at home, putting it in the middle of the pack. Managers put a lower priority on job flexibility (35% cited it) and working at home (15%).

In February, new Yahoo CEO Marissa Mayer issued the decree that launched a thousand outraged blog posts: No working at home. Inconceivable, the critics cried. Without offering such job flexibility in this day and age, employers won't be able to recruit a talented, diverse workforce, they said.

If Mayer had said that all employees must be stationed at their posts at 8:30 a.m. and can't leave before 5:45 p.m., I'd agree. Employers must recognize that employees have earned the right to come in late or leave early some days in exchange for working long hours other days. And I suspect that even Mayer, once she has Yahoo's culture (and company size) where she wants it, will become more flexible as time goes on. Our data suggests that the ability to work at home isn't necessarily the deal breaker for most IT professionals that the howling outrage about Yahoo's policy would have you think.

>> Not all analytics is created equal.

For staffers, the analytics/business intelligence function lands in the mid-range of compensation. At a median of $93,000, it earns a modest 3% premium over the typical IT staffer pay despite the hoopla over big data. But this category covers a huge range of skills. There's a big difference between the true data scientist and analyst who can tease out insights from huge data sets, or specialists who can create and manage big data infrastructure to let others do that analysis, and those who are building static reports.

Analytics/BI managers earn much higher median total comp. At $132,000, it's tied for fifth among the 23 job categories in our survey and 10% higher than typical IT manager pay.

The pay premiums are much higher in the data integration/warehousing category, with median total compensation of $109,000 for staff (a 21% premium over typical staffer pay) and $130,000 for managers (an 8% premium).

As my colleague Doug Henschen writes in his in-depth InformationWeek report on salaries for analytics and BI pros, the highest salaries among analytics pros go to "difference makers" who can pull together the right data and make sense of it to meet a business need. Writes Henschen: "The trouble is, there are not enough of these visionaries to go around, particularly with the rise of the so-called big data era driving up demand for the most-gifted employees."

>> Application development is surviving against outsourcing.

Staffers who classify themselves in an application development function earn a median $100,000 in compensation, ranking this function eighth out of 23. Among managers, application development ranks fifth, at $132,000, tied with business intelligence/analytics and enterprise application integration.

IT pros in the U.S. have gone through wrenching change over the past decade as programming jobs went to India and other lower-cost countries. In our 2003 survey, we asked unemployed IT pros what job they did most recently, and 16% -- the No. 1 answer -- said application development. Nevertheless, app dev salaries have held up reasonably well. In our 2003 Salary Survey, for example, app dev compensation, at a median $73,000, also ranks seventh.

We're seeing growing interest in in-house app dev teams as software becomes a more crucial part of the customer experience companies deliver. Think of mobile apps. Most companies started by outsourcing that development function, but as mobile apps have become vital to retail and other companies, they're bringing that expertise in-house.

Outsourcing shows no sign of abating. Half of the companies represented in our survey use onshore and/or offshore IT outsourcers, about the same share as in 2004. IT pros aren't quite as discouraged about outsourcing's impacts as they were a decade ago.

Just over half of staffers and managers say it has led to fewer IT jobs, compared with 75% who felt that way in 2004. Two-thirds of the IT pros in our survey say outsourcing hasn't impacted their careers, and 13% of staffers and 20% of managers say it has led to expanded or new responsibilities.

>> The gender gap persists.

Across our survey, female IT staffers earn 13% less in total compensation than male IT staffers; female IT managers earn 10% less. That gap is nearly identical to what it was 10 years ago.

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However, our data doesn't explain why that gap exists, and whether women are being paid less for comparable roles in similar industries. For example, we haven't looked at whether women in our survey are underrepresented in high-paying industries such as finance or overrepresented in lower-paying ones such as state and local government. (In total, 13% of the respondents to our survey are female, 87% male.)

Our data does show that the pay gap can vary significantly by industry. In healthcare, for example, the gender pay gap shrinks to 1%. But healthcare is a relatively low-payer field -- IT staffers earn $5,000 less in total comp than the typical IT pro. In securities and banking, among the highest-paid industries, female IT staff earn almost 10% less ($92,000 compared with $102,000 for male staff), while female managers earn 20% less -- $109,000 compared with $137,000 for males IT managers.

>> A sizable minority of IT pros are embedded in business units.

One-third of the IT managers in our survey report to someone outside of the IT organization for at least half of their time, and one in five IT staffers do.

We asked this question for the first time this year because there's so much discussion about business units controlling more of the IT budget -- fueled by Gartner's prediction that the CMO will control more tech spending than the CIO by 2017.

When IT pros are embedded in a business unit, that function tends to consume most of their time. When we asked if staffers are embedded in a business unit, 19% say it applies to more than half their time, and 72% say it doesn't apply at all. Just 9% say it applies to less than half their time. The lesson for IT leaders is that IT pros embedded in marketing or manufacturing won't be able to keep a "day job" supporting ERP applications or balancing data center workloads.

With the answers to another question, we find that about one-third of IT staffers and half of managers have formal responsibilities outside of IT, even if they're still part of the IT organization. The most common areas are business development, R&D, non-IT support and marketing. Anecdotally, we see more IT pros are spending time with marketing and product development teams, as technology becomes a bigger part of these customer-facing disciplines.

In which roles outside of IT have the respondents to our survey held full-time positions? Marketing/sales (20% of staffers, 23% of managers), non-IT support (19%, 14%) and operations/supply chain/manufacturing (18%, 19%).

Don't fear the fact that IT roles and spending are drifting outside of the IT organization. It simply means the value of applied IT knowledge and skills is rising. The people who should be worried are the 46% of IT staffers and 30% of managers who say "spending time with peers in a business unit outside of IT" doesn't apply to their jobs at all.

>> Bay Area salaries are hot, even for the Bay Area.

The median base salary for IT staffers in the San Francisco area is $120,000 -- 38% higher than the median salary nationwide and 10% higher than in the No. 2 metro area, Washington, D.C. ($109,000). OK, it's no shocker that tech pros in the Bay Area are highly paid, but the gap between it and the No. 2 market is up to 10%, compared with 3% last year. Bay Area IT managers earn a median $140,000, 27% more than the national median and 4% more than area No. 2, New York.

The rising IT pay in the Bay Area appears to reinforce its place as the center of U.S. tech innovation. We're seeing a steady stream of big tech venture funding deals. We've seen companies such as Workday, ServiceNow,, Google and Facebook become destination employers, while stalwarts such as Oracle and Apple still anchor the region. We've also seen established companies on the outskirts of the tech industry, the likes of GE and Ford, open offices in the valley to tap into its innovation ecosystem.

On the flip side, it will be interesting to see if more companies take the General Motors approach. As it sets up tech centers and hires thousands of IT pros in its shift away from outsourcing, GM has decided to eschew Silicon Valley for metro areas (Atlanta; Austin, Texas; and Phoenix among them) where the talent is more affordable and the competition for that talent is less fierce.

In terms of median IT manager pay, Atlanta ranks 16th, Austin 17th and Phoenix 19th among 20 metro areas covered in our survey. Detroit, where GM also is expanding and hiring, ranks 18th. Austin and Atlanta rank higher for staff salaries (eighth and 12th), but Austin's median pay is still $22,000 a year less than in the Bay Area. Railroad Union Pacific is another company opening a new office in Austin looking for talent.

>> Working for a big-name employer goes only so far.

This is probably the most unequivocal statement I can make from our Salary Survey: IT pros aren't impressed by your fancy company name. In our survey, prestige/reputation was rated dead last on the list of job qualities that matter, the third year in a row it came in last. Just 9% of managers and 6% of staffers put it among their top seven priorities.

This finding is important as companies chase the same scarce talent in fields such as analytics. Granted, competing on pay with a Goldman Sachs or Facebook isn't easy, so offering a competitive paycheck is step one. But employers that can bundle up competitive pay, challenging projects and recognition for work done well -- factors that rank at the top of our list -- can go toe to toe with flashier and more established companies.

>> IT career optimism is rising.

Forty-five percent of IT staffers and half of managers think IT is as promising a career as it was five years ago. Of course, when 44% of staffers and 42% of managers say it's not as promising (the rest are unsure), the overall outlook might still seem bleak. But consider that two years ago just 33% of staff and 40% of managers considered the career as promising as it was five years prior. And in 2004, just 15% of staffers and 21% of managers considered it as promising. That 2004 nadir came at the tail end of the tech recession, with offshore outsourcing wiping out jobs and the memory of dot-com bonuses still fresh enough to hurt.

Almost two-thirds of IT staffers and managers in our latest survey say they're satisfied with their jobs overall, including the pay. In 2004, less than half of staffers said they were satisfied, while 56% of managers did. About 90% IT pros say they're very secure or somewhat secure in their jobs; about 10% feel insecure.

>> Managers aren't that important in the quest to retain good people.

Conventional wisdom often holds that people leave or stay in jobs based on the quality of their direct managers. But when we asked in our survey about the top job factors that matter, only 14% of respondents said the effectiveness of an immediate supervisor is among the most important. That finding surprised us, so we went back 10 years: Our survey then found a single-digit-percentage response.

So are managers off the hook for people retention? Well, no. Managers who lose their best people for whatever reason won't succeed. Instead, the message for IT leaders is that they need to understand what matters to their staffers and pick the right fights to get their people what they need. Lobby for raises for top people, or for other one-off financial rewards if base pay is stalled. If company policies limit job flexibility, collaborate with HR to make changes. "Knowing my opinion is valued" is a top-five priority for staffers and managers, and that factor is firmly in a manager's control. "Challenge" is also highly rated -- No. 2 for managers. A talented IT pro might leave in search of more challenge and not blame it on an ineffective manager. But a great leader finds new challenges to keep that person excited and provides recognition when he or she succeeds.

>> Most managers aren't thinking strategically.

Twenty-nine percent of the IT managers in our survey cite "seeking new business opportunities" among the critical skills they need to develop. That puts it last on a list of 15 skills, and it's the same last-place ranking it has held for the past five years. No. 1 is aligning business and technology goals, at 84%, also the same perch it has held for five years. Fifty-two percent of managers cite preparing reports, which is only slightly less than the 58% given the more-strategic role of analyzing data.

Compare these findings with what we saw earlier about embedded IT -- where one-third of tech managers report to a manager outside of the IT organization at least half of the time, and half of IT managers have formal responsibility outside of IT. Don't those marketing, R&D and business development teams want their embedded IT people helping them think of new business opportunities, not just knocking out data reports they ask for? One positive finding here is that more than half of IT staffers and managers consider interacting with customers critical. For anyone looking for a spot as a highly valued, well-paid IT pro, combining a deep understanding of the customer with sharp technical skills is a strong place to start.

About the Author(s)

Chris Murphy

Editor, InformationWeek

Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in Hungary; and a daily newspaper reporter in Michigan, where he covered everything from crime to the car industry. Murphy studied economics and journalism at Michigan State University, has an M.B.A. from the University of Virginia, and has passed the Chartered Financial Analyst (CFA) exams.

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